Jyoti CNC Automation's IPO was booked more than three times on its second day; The retail share has subscribed almost ten times

The initial public offering (IPO) of Jyoti CNC Automation continued to witness good response from investors on the second day of the bidding process. The issue, the tender for which began on Tuesday, January 9, was subscribed 2.52 times at the end of the first day. Gujarat-based Jyoti CNC Automation offers its shares in the price range of Rs 315 to Rs 331 per piece with a lot size of 45 shares and their multiples thereafter. The company aims to raise a total of Rs 1,000 crore through its primary offering, which will be exclusively for fresh equity sale of up to more than 3.02 crore shares. According to the data, by 12.35 pm on Wednesday, January 10, investors placed bids for 5,50,49,985 shares, 3.14 times, compared to the 1,75,39,681 shares offered for subscription. The three-day bidding issue ends on Thursday, January 11th. The portion for retail investors was subscribed 9.79 times while the portion reserved for non-institutional investors was subscribed 4.89 times. The employee share was booked 4.59 times. However, the quota intended for qualified institutional bidders (QIBs) only reached two percent of the bids at the same time. Established in January 1991, Jyoti CNC Automation is a CNC machine manufacturer and supplier specializing in a diverse range of CNC machines, offering 200 types in 44 series. CNC machines are computer-controlled machines that play an important role in the manufacturing industry. Brokerage firms have a mixed opinion on the subject of Jyoti CNC Automation. Some suggest applying for the issue in the longer term, citing its strong business and market share, while others suggest avoiding the issue due to low profitability, loss-making nature of the business and rising debt. The company is a leading CNC manufacturing company with an order book of Rs 3,320 crore, which gives us strong revenue visibility. According to IndSec Research in its IPO announcement, the aerospace and defense sector contributes 57 percent of the total order book. “The company grew its revenue and Ebitda at a 2-year CAGR of 27 percent and 75 percent, respectively, supported by increasing utilization and operational efficiency. We believe Jyoti CNC is poised to benefit from the ongoing capex cycle and should witness healthy growth in the medium term on the back of strong order book,” she added, giving the IPO a “Subscribe” rating. Ahead of its IPO, Jyoti CNC Automation has raised Rs 447.75 crore from anchor investors by completing allotment of 1,35,27,190 shares at a price of Rs 331 apiece. 75 percent of the shares will be reserved for qualified institutional bidders (QIBs), while 15 percent of the shares will go to non-institutional investors (NIIs). The remaining 10 percent of the net offer should go to private investors. The high P/E ratio of 324 based on last year's diluted EPS of Rs. 1.02 requires close scrutiny, especially when compared to the peer group's P/E ratio. The market's optimism appears to hinge on the company's expected surge in profitability in the following years, said StoxBox of BP Equities, which has an “avoid” rating on the IPO. SBI Capital Markets, Equirus Capital and ICICI Securities are acting as book running lead managers for the IPO of Jyoti CNC Automation, with Link Intime India acting as registrar. The company's shares are scheduled to be listed on both the BSE and NSE on Tuesday, January 16, 2024.

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